Here’s what Airshare paid to Wheels Up

As Airshare expands to new regions and Wheels Up seeks to shrink to profitability, the latter’s Q4 financials revealed the terms of the pair’s transaction last year.

According to Wheels Up’s 10-K SEC filing, the sale price was $19.1 million.

Terms had not previously been disclosed. We reported the deal was thought to be valued at under $25 million.

In the end, Wheels Up received $13.2 million in cash on the closing date in September.

There was contingent consideration with a fair value of $4.8 million.

An escrow receivable held $0.6 million, and a non-contingent consideration receivable of $0.5 million.

The fair value of the contingent consideration was the approximate contract value of the aircraft management contracts with the airplane owners.

Wheels Up says it ended with a “post-closing final working capital settlement of $3.4 million.”

That money was paid in Q1 2024.

Anatomy of a breakup

The actual entity purchased by Airshare was Circadian. It had previously been known as Gama Aviation Signature.

Wheels Up bought Gama Aviation Signature as part of an acquisition spree that also included TMC Jets, Delta Private Jets, Mountain Aviation, and Alante Air.

However, the Airshare purchase covered all of Wheels Up’s managed aircraft.

For example, Delta Private Jets, now Wheels Up Private Jets, was purely a management company before being bought by Wheels Up.

Airshare, via Circadian, is providing maintenance, pilot services, and management for those aircraft “while they are transitioned” from Wheels Up-owned operators to Airshare operating certificates.

At the same time, Airshare is also operating some Wheels Up-owned and leased aircraft until they can be transferred back to a Wheels Up certificate or sold.

Wheels Up has said it plans to prune its fleet.

The SEC filing showed that at the end of 2023, it had 185 owned and leased aircraft.

That is down from 215 last September.

In March 2020, Wheels Up acquired Gama Aviation Signature, bringing its fleet to over 300 aircraft.

It paid with 1,724,138 common interests (it was not publicly traded at the point), $41.3 million in cash, and the issuance of two promissory notes with an aggregate initial principal amount of $27.5 million payable to certain affiliated parties of Gama.

In its Q4 filings, Wheels Up said it recognized a $3 million loss selling Circadian to Airshare.

Wheels Up had previously taken a $132 million goodwill impairment charge related to its various acquisitions.

Air Partner growth

Also of interest was the growth of Wheels Up’s international revenues, coming through its Air Partner acquisition.

While domestic revenue dropped from $1.49 billion in 2022 to $1.16 billion, international revenue grew from $80.3 million to $96.2 million.

However, the 2022 revenues only reflect the April to December period after it acquired the U.K.-based charter broker.

Wheels Up executives have said the Air Partner’s on-demand brokerage capabilities are key to its profit goals.

Last year, Wheels Up CEO George Mattson said there had been discussions about international growth.

Delta Air Lines partners, such as Air France/KLM and Virgin Atlantic, could be part of the strategy, he said.

Mountain Aviation

In another financial footnote, the former owners of Mountain Aviation did not receive a potential $15 million incremental cash earn-out.

The Wheels Up filing stated, “The estimated fair value of the earn-out payment using a Monte Carlo simulation model as of the acquisition date was $0. No contingent consideration was received during the year ended December 31, 2023.”

READ: Here’s how much Wheels Up paid for each of its 5 acquisitions